62A. Adjustment of tax deductible in relation to unpaid consideration

Summary

This section provides that where a person deducts VAT in a taxable period but has not, within 6 months of the end of that taxable period, paid the supplier for the goods or services, then the amount of VAT deductible will be reduced by the amount of VAT relating to the unpaid consideration i.e. the VAT deducted relating to the unpaid consideration must be repaid to Revenue. A re-adjustment is provided for in the event of subsequent payment or part payment for the goods or services.

This provision relates to VAT deducted in taxable periods commencing on or after 1 January 2014.

Details

(1)(a) & (b)Where an accountable person deducts VAT charged to him or her in a taxable period referred to as the “initial period” and consideration for the related supplies of goods or services remains unpaid or partially unpaid after 3 taxable periods (i.e. 6 months) of the initial period, an adjustment of the amount of tax deducted is required.

(2)The adjustment must be made in the third taxable period following the period in which tax was deducted and includes the formula for calculation of the adjustment.

(3)Where an adjustment is made and the person subsequently pays the full consideration or part thereof, a corresponding re-adjustment should be made in the period in which the full or partial consideration was paid.

(4)Where there are reasonable grounds for not having paid the full consideration or part thereof, an adjustment will not be required.

This subsection allows for the making of regulations, if necessary, in relation to the operation of the section.

Relevant Date: Finance Act 2020